Posted by: Elixir February 18, 2010
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Yes; you should report those stocks that you sold - not the ones that you are still holding. If it was a net loss on all those transactions (for sold stocks), you get to deduct a net loss of upto $3000. However, if you sold the stocks and bought the same stock within 31 day period, that particular stock transaction is regarded as wash sale and the loss is not allowed to deduct. In normal situations, you will be eligible to deduct $3000 of loss from your income.
Wash sale situation explanation: For example you sold Citi Bank 1000 shares on 08/01/2009 and bought the Citi 1000 shares on 08/25/2009, and if you had a loss on the sale of 08/01 stock, such loss is not allowed since it is regarded as a wash sale. It is regarded as though you never sold that Citi 1000 shares and you still hold it. IRS thinks that you sold those 1000 shares to report a loss when in fact you are still owning the same 1000 Citi shares. However, if the purchase is after 31 days, you can still report the loss on the sale of the stocks. If you are dealing with several purchases and sales of same company stocks, then you do need to consider the wash sale factor.